Tag Archives for the US national debt

If you read Part 1, then you might understand that the annual federal budget is a complicated process and no President or Congress can be held responsible for all of the Mandatory and Discretionary spending. By that, I mean, can we blame President Obama for Social Security; Medicare; the VA, the Department of Defense [formed in August 1949], etc.?

Have you ever asked what would happen if the President and Congress had to cut discretionary spending and stop borrowing money to fund government, what would have to go? Mandatory spending cannot be cut because it is funded with specific taxes. For example, Social Security cannot use other taxes to fund that program. Social Security has to be funded by the Social Security tax but Congress has used this tax to fund other departments and programs. To understand this better, I suggest you read Social Security and Medicare’s impact on the national budget = ZERO!

To—hopefully—give you a better idea, I found this information at The Heritage Foundation: In 2012, there was $2.501 trillion in total revenues; Mandatory Spending was $2.073 trillion, and Discretionary Spending was $1.313 trillion.

If the government was not allowed to borrow, that would leave $428 billion to fund Discretionary Spending, and then $885 Billion would have to be cut—for example— from the Department of Defense’s [DOD]; the VA’s Discretionary budget; the Department of Transportation’s budget; the Administration of Justice’s [the courts] budget, etc.

I’m sure criminals would love to see Justice cut.

Now, who decides how to divide up those cuts and how many millions of people might see their retirement incomes shrink so drastically that they wouldn’t have enough money to feed themselves in addition to paying the electric bill and the rent. Soon the homeless population would explode like a nuclear bomb.

How would our military defend America and fight its endless wars? How would the VA take care of veterans who were wounded in combat and the health care of retired military? How would the Food and Drug Administration make sure the food was safer to eat?

National Debt and Deficit Explained

Oh, and if you think all it would take is cut welfare from the budget and make those so-called deadbeats work [most people on welfare work long-hours at low-paying jobs and the rest are too old to work; are children, or are disabled], the budget for Food Stamps and other Nutrition programs for the elderly and disabled cost $114.9 billion in 2012 and that is not even close to the $885 billion that would have to be cut to balance the budget and stop deficit spending. Housing assistance, another form of welfare costs only $40 billion. Even with that gone, we’re still a long way from cutting $885 billion from the budget.

Maybe the United States could cut Farm Subsidies that are usually paid to wealthy corporate farmers, but that’s only $12.5 billion [this program cost $24.4 billion in 2002 so it has already been cut in half].

We could also cut unemployment benefits even though America’s workers and employers paid unemployment taxes to fund that government insurance program. That would cut $107 billion, but then there would be no unemployment benefits when a citizen lost his or her job. Without money, they would soon be homeless and starving along with the elderly, children and disabled who lost their food stamps and welfare support.

I think this must be repeated as often as possible: Entitlement programs like Unemployment, Social Security and Medicare all have their own special tax revenue source to fund them and that was and still is being paid for by working Americans.

So, who do you want to cut out of the budget? Remember, the cuts you propose must add up to almost $900 billion, and if we did away with Social Security and Medicare then the taxes that fund those entitlement programs would vanish too leading to even deeper cuts.

If you still don’t get it, maybe this will help: if we call Social Security Paul, and the discretionary slice of the budget Mary, then Congress has been legally stealing from Paul to pay Mary for a very long time but Paul can’t steal from Mary because the law that manages Social Security doesn’t allow that to happen.

For some fool to think that President Obama is personally responsible for the trillions of dollars that have been added to the National Debt while he has lived in the White House, Obama would have had to launch new spending programs and add more departments and agencies to the government that increased spending but he would still need the approval of the Congress. The only program we’ve heard the GOP complain about is The Patient Protection and Affordable Care Act—better known as ObamaCare—a program that has not increased the national debt one penny so far and may never increase it.

It has been estimated that ObamaCare will cost the federal government $1.36 trillion dollars by 2023. That means, ObamaCare—as it is popularly known—will cost an average of $136 billion annually to fund according to the Congressional Budget Office. But due to the methods/sources used to fund the program, it has been estimated that ObamaCare will reduce the federal deficit by $210 billion over the 2012 – 2021 period. To discover how, click on the following link and scroll down to read How Do We Pay for ObamaCare Costs?

The only way President Obama may be held responsible for the increase in the National Debt is if he increased spending but according to Tax Policy Center.org, Obama has cut spending by 1.4% while he has been in office.

In comparison, G. W. Bush increased spending 4.5%.

What They Won’t Tell You about the National Debt

In fact, Bush’s 1st annual budget [2002] increased the deficit by $157.8 billion; the 2nd [2003] annual budget by $377.6 billion; 3rd [2004] by $412.7 billion; 4th [2005] by $318.3 billion; 5th [2006] $248.2 billion; 6th [2007] $160.7 billion; 7th [2008] $260.7 billion, and the 8th [2009—Yes, Obama was president but it was the last budget President Bush proposed to Congress] led to a deficit of $1.4127 Trillion. To explain, the first year a president is in office, he or she runs the country with a budget left over from the previous president and it’s too late to do over because the Congress already approved it.

Lloyd Lofthouse is a former U.S. Marine, Vietnam Veteran and English-journalism teacher.

His latest novel is the award winning Running with the Enemy that started life as a memoir and then became a fictional suspense thriller. Blamed for a crime he did not commit while serving in Vietnam, his country considers him a traitor. Ethan Card is a loyal U.S. Marine desperate to prove his innocence or he will never go home again.

And the woman he loves and wants to save was trained to hate and kill Americans.

To follow this Blog via E-mail see upper left-hand column and click on “FOLLOW!”

The Republican Party—known as the GOP or the Grand Old Party—was founded on February 28, 1854, when Alvan E. Bovay called an anti-slavery meeting at the Congregational Church in Ripon, Wisconsin. Abraham Lincoln was the GOP’s first elected U.S. President.

Abraham Lincoln said, “You can fool all of the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.”

That leads me to this question: why is it so easy for the GOP—or Democrats for that matter—to fool some of the people all of the time, and why am I asking this question?

Let me explain, and I hope that I don’t lose the thirty-second people who make up the average readers surfing the Internet. Short attention spans and poor reading skills often don’t make for educated people and ignorant people are easy to fool.

I left a comment for an ABC-Yahoo! News piece about the US National Debt and the Deficit. Many of the comments blamed Obama for the increased National Debt. Anyone who disagreed was voted down by a large margin.

President G. W. Bush’s 2009 budget—the last budget he submitted to Congress—left the national debt at $12,311,349,677,612 [that’s more than $12.3 Trillion].

Near the end of Obama’s first term in office in December 2012, the debt had reached $16.4 Trillion, and conservative-media critics and tea-party politicians blamed Obama for the increase—in thirty seconds or less, I’m sure—and in my comment, I explained—until I ran out of room—why President Obama could not be held responsible for most of what has been added to the debt since he has been President.

Then an anonymous person left a comment and accused me of lying and this anonymous person left no evidence to support that accusation. I did not lie and the facts—when one spends the time to understand them—also do not lie.

Mandatory and Discretionary Spending Explained

All I did was explain—probably in too much detail for the average 30-second fool—that the annual-federal budget had two parts: 1. mandatory and 2. discretionary spending. According to NationalPriorites.org, 62% of the annual budget is mandatory and only an act of Congress can change this portion of the budget. When I say mandatory, I’m talking about programs like Social Security that’s been around since 1935 and Medicare since the early 1960s. Without approval from Congress, the president cannot change the way these programs are funded, because they are on automatic pilot. If you want to discover more about mandatory spending in the U.S. Federal Budget, you can find it here at cbo.gov

It is Discretionary spending that funds the departments and agencies of the federal government and here is where the President has some input, but he still needs approval from Congress. He can’t force Congress to approve the budget.

For example, the Department of Defense [DOD] gets 57% of discretionary spending [in 2011, President Obama proposed $549.1 billion to fund the DOD, but Congress only approved $530.8 billion]; the Department of Education received 3% of discretionary spending; Department of Labor 2%; Department of Transportation 2%, etc.

Discretionary spending may be increased or decreased on an annual basis by Congress. In other words, what will it cost for each agency to operate for another year to fulfill that department or agencies duties according to laws that were passed by Congress?

There is one department that has both mandatory and discretionary spending. The Department of Veterans Affairs (VA) was formed in 1778, and for 2013, 54.4% of its budget [$76.3 Billion] was considered mandatory and could not be touched. Therefore, the President can only submit the VA’s discretionary budget of $64 Billion to Congress for approval.

This paragraph offers an example of the challenge that comes with cutting federal budgets: VA Medical Programs make up 87.9% of the Discretionary Budget for the VA—programs that are in place because they were promised to military veterans who fought in World War II, the Korean War, the Vietnam War, The Iraq War and Afghan War. Millions of troops who fought for their country—for you—have service-related disabilities that need medical care, and each year the cost of this medical care increases requiring the President—no matter who he or she is—to request more money to fund this program. Source: va.gov

And some fools blame the president for increasing spending for the VA and other departments. Do you want to refuse medical care for the troops who fought in America’s war—the troops who defended this nation; who defended you?

As you might now understand—I hope—based on the needs of the federal agencies and departments, the president’s budget proposal projects estimated spending, revenue, and borrowing levels for the coming fiscal year starting each October 1. The president’s budget proposal serves as a starting point for Congress to consider, and Congress is under no obligation to adopt all or any of the President’s budget and—historically—often makes significant changes.

And deficit spending happens when tax revenues do not cover mandatory and discretionary spending. If the law didn’t allow the federal government to borrow money, one of four things might happen: 1. The Congress drastically raises taxes; 2. The Congress drastically cuts funds to federal departments and agencies like the DOD ending the ability of the U.S. to defend itself; 3. The Congress raises both taxes and cuts funds to some agencies and departments to find a balance if possible, or 4. the government goes bankrupt, shuts down and the United States collapses as a civilization erupting into anarchy, chaos and violence.

Maybe China would send troops to the United States to restore order, because after the West collapsed financially, China might be the only country left that could afford to do that.

Lloyd Lofthouse is a former U.S. Marine, Vietnam Veteran and English-journalism teacher.

His latest novel is the award winning Running with the Enemy that started life as a memoir and then became a fictional suspense thriller. Blamed for a crime he did not commit while serving in Vietnam, his country considers him a traitor. Ethan Card is a loyal U.S. Marine desperate to prove his innocence or he will never go home again.

And the woman he loves and wants to save was trained to hate and kill Americans.

To follow this Blog via E-mail see upper left-hand column and click on “FOLLOW!”

In 2009, the National Debt, at the end of President G. W. Bush’s (2001 – 2009) last annual budget reached almost $12 Trillion.

However, according to Joe Weisenthal of Business Insider Magazine, it was President Clinton (1993 – 2001) that brought about the global financial crises of 2007-08 that still haunts us today because he did not spend enough and increase the national debt.

Conservative, Libertarian and Tea Party national debt critics often use this opinion as evidence to place blame on President Clinton in addition to welfare spending for the current growing $16 Trillion National Debt as if no one in the Republican Party (GOP) is responsible for one cent of it.

At this point, I think it is necessary to stop and examine the foundation of this claim before continuing with the Evolution of a National Burden.

Who is Deputy Editor Joe Weisenthal and Henry Blodget, his boss at Business Insider Magazine?

Binyamin Appelbaum at The New York Times says, “In Weisenthal, Blodget has found a market-obsessive who embodies his vision. Weisenthal, 31 and still a bit baby-faced, is funny, omnivorous and well versed in the mechanics of the economy. In the intensely competitive world of financial blogging, dominated by young men who work long hours and comment on every new development, Weisenthal stands apart by starting earlier, writing more, publishing faster. …

“Weisenthal wanted to come to New York as a playwright. In college at the University of Texas, he wrote the lyrics and music for a satire of Ayn Rand’s philosophy, and after graduating in 2002, he submitted it to the New York International Fringe Festival. When the play was rejected, he took the analyst position instead. And when that began to sour, he and a friend started a blog cataloging their thoughts about markets called TheStalwart.com. …

“Weisenthal says his own political thinking has shifted from something like libertarianism to the Keynesian view that the government should borrow and spend massively during a recession.”

Weisenthal’s thinks Bill Clinton brought about the financial crisis by running surpluses (and not borrowing and spending massively adding to the national debt). Weisenthal claims that it was Clinton’s surpluses that lead to the accumulation of private debts that subsequently triggered the financial crisis.

His boss, the editor and CEO of The Business Insider Magazine, is Henry Blodget.

In 2002, then New York State Attorney General Eliot Spitzer, published Merrill Lynch e-mails in which Blodget gave assessments about stocks which conflicted with what was publicly published. In 2003, Blodget was charged with civil securities fraud by the U.S. Securities and Exchange Commission. He agreed to a permanent ban from the securities industry and paid a $2 million fine plus a $2 million disgorgement.

Before his time at Merrill Lynch and the subsequent charge of civil security fraud, Blodget was a freelance journalist and a proofreader for Harper’s Magazine. In 2001, he accepted a buyout of his contract from Merrill Lynch and left the firm. Blodget’s net worth is $15 million today. Source: Get Networth.com

In addition, you may want to read this from John Carney, a Senior Editor at CNBC.com. “My old boss Henry Blodget has a post up at Business Insider lamenting the fact that he cannot cast his vote for a fiscally conservative Republican without also supporting what he calls “Republican Religious Aggressives.”

Blodget started as a freelance journalist/proofreader and then worked for Merrill Lynch before being banned from the securities industry due to a charge of civil securities fraud. Then he became the millionaire editor and CEO of a financial magazine, and in Joe Weisenthal, Blodget, a “conservative Republican” probably found maybe the only thirty-something man with libertarian/Keynesian views on the planet that “embodies his (own crackpot) vision”.

His latest novel is Running with the Enemy. Blamed for a crime he did not commit while serving in Vietnam, his country considers him a traitor. Ethan Card is a loyal U.S. Marine desperate to prove his innocence or he will never go home again.

And the woman he loves and wants to save was trained to hate and kill Americans.

To follow this Blog via E-mail see upper left-hand column and click on “FOLLOW!”

If you have heard or read, as I have, that the US Founding Fathers did not support universal health care for Americans, it helps to compare medical care then with today and then remember that the Founding Fathers wrote a Constitution that was flexible and designed to change with the times as the country grew.

In fact, when the US Founding Fathers wrote the US Constitution, there wasn’t one country on the planet that had universal health care.

The first country that would have a universal health care system was Germany with Otto von Bismarck’s social legislation in 1883 (almost one hundred years after the adoption of the US Constitution).

Next was the UK when she passed the National Insurance Act in 1911 marking the first steps toward universal health care covering most employed persons and their financial dependents and all persons who had been continuous contributors to the scheme for at last five years.

As you have now learned, in 1787, the concept of universal healthcare did not exist anywhere in the world, so how could America’s Founding Fathers be against something that did not exist?

In 1792, America’s population was 4.2 million and its GDP was $223 million, the cost of defense was $1.2 million (.5% of GDP); interest on the Federal debt was $2.3 million (1% of GDP), the deficit was $1.4 million (.6% of GDP), and the national debt was $77.2 million (34.6% of GDP).

There was no welfare spending probably because 95% of Americans lived in rural America and produced most of the food they consumed from farming and/or hunting. If you live in a log cabin or a sod hut that you built and you grow or hunt the food you eat, is there a need for food stamps?

Today, 79.2% of Americans live in urban cities and do not grow or hunt the food they eat. These people buy food from markets.

In fact, less than 1% of America’s population claims farming as an occupation. The number of farms in the US is about two million. Source: EPA.gov

In addition, life expectancy in 1790 was age 34.5 for males and 36.5 for females, and “the views held by 18th century physicians are very different from those held by medical practitioners of today. Physicians in the 18th century had no knowledge of bacteria, germs, or viruses, nor of the fact that disease was spread by them. Therefore, they did not practice sterilization, or personal or hospital hygiene. … (and) Many people lived too far away from any doctors to use their services, and other people did not have access to doctors because of social customs or beliefs.” Source: US History.org

However, today, life expectancy in the US is about age 75.7 for males and 80.8 for females. Do you know how that increase in the average life span came about?

In the 218 years since 1792, the nation has changed dramatically. Today we have paved roads, railroad, airports, hospitals, electricity, X-ray machines, Cat Scans, MRIs, antibiotics, nuclear weapons, missiles, passenger aircraft, lasers, modern medicine, the Internet, etc. In 1792, heat came from burning coal or wood and light came from candles. Most people went to the bathroom in an outhouse if there was one available. For most of the US, there was no toilets, running water, sewer systems, etc.

In addition, the first commercial electric power transmission in the US came near the end of the 19th century. Availability of large amounts of power from diverse locations would become possible after Charles Parsons’ production of turbogenerators beginning in 1889.

In 1792, there was no federal pension programs for old people such as federal employee retirement and disability ($119.9 Billion today); Social Security ($706.7 Billion today and funded through a worker-employee tax trust paid for by working people).

Did the nation need a national health care plan, retirement and Social Security programs when the average person would be dead by age 35? Did anyone even think about it back then?

Beyond the occasional local community supported one-room school house, there was no state or national education systems. But the nation changed, and in 2010 the federal budget cost of public education was $139.4 Billion ($113.2 Billion was paid to the states by the federal government) and state and local costs of public education were $872 Billion funded by state and local taxes such as sales tax and property tax.

Does welfare make Americans dependent and do we have a welfare state in America today?
The answer is NO!

By 2010, America’s population was 308.7 million (compared to 4.2 million in 1792); its GDP was $14.5 Trillion; the cost of defense was $847.2 Billion; interest on the federal debt was $196.2 Billion; and although there was no socialist, life-time cradle to grave welfare system in the US (did you watch the above video?), the cost of welfare was listed as $502.3 Billion that is explained in detail by the CRS overview of federal welfare spending.

We often hear about the cost of big government. Well, the cost of running the federal government in 2010 was only $24.7 Billion for a federal work force, not counting the military or judicial system (federal courts), of 2.8 million people or 0.9% (less than 1%) of the total US population .

Sixty-four thousand work in the federal judicial system and 1.6 million serve in the military fighting America’s endless wars. By June of 2012, the civilian federal work force was down to 2.2 million or .7% (still less than 1%) of the current 314.8 million US population.

From The Encyclopedia of Earth we learn that, “The tax mechanisms used during the first 150 years or so of U.S. tax history bears little resemblance to the current system of taxation. First, the U.S. Constitution restricted “direct” taxation by the federal government – meaning taxes directly on individuals. Instead, the federal government relied on indirect taxes including taxes on imports (tariffs) and excise taxes. Tariffs were the major source of U.S. government receipts from the beginning of the nation up to the early 1900s. For example, in 1800, custom duties comprised about 84% of government receipts. Internal federal revenue collections (which exclude tariffs on imports) as recently as the early 20th century were primarily derived from excise taxes on alcohol. In 1900 over 60% of internal revenue collections came from alcohol excise taxes with another 20% from tobacco excise taxes.”

As you have discovered, the source of federal government revenues has changed dramatically the last 200 years as the country changed along with the needs of her people and military.

For example, the cost of a musket to arm one US solider in 1792 would have been $250 to $500 in today’s money. For a comparison, a legal fully automatic M16 assault weapon used by US troops that has been registered with the ATF, and can be transferred to a private citizen currently sells for about $16,000, plus a $200 transfer tax.

The cost of one Nimitz-class aircraft carrier runs about $4.5 billion. The original USS Constitution, also known as Old Ironsides, was launched in 1797 and cost about $300,000 to build ($5.45 million in 2012).

His latest novel is Running with the Enemy. Blamed for a crime he did not commit while serving in Vietnam, his country considers him a traitor. Ethan Card is a loyal U.S. Marine desperate to prove his innocence or he will never go home again.

And the woman he loves and wants to save was trained to hate and kill Americans.

To follow this Blog via E-mail see upper left-hand column and click on “FOLLOW!”

In the CRS overview of federal welfare spending even the $55.6 Billion refundable earned income tax credit was counted as welfare. Another $164 Million listed as welfare went to fund programs for Breast/Cervical Cancer Early Detection in addition to $5.54 Billion for Indian Health Services (Do you remember the treaties the US signed with defeated American native tribes back in the 19th century?)

Also listed as welfare was the $353 Million the federal government spent for Transitional Cash and Medical Services for Refugees in addition to $6.594 Billion in temporary cash aid for needy families.

This one may surprise you—it surprised me: Water and Water Disposal for Rural Communities was listed as welfare, and that service cost the federal government $121 million in 2011.

There is also $2 Billion in nutrition assistance for Puerto Rico and another $848 million in nutritional programs for the elderly.

In fact, there are ten food assistance programs listed as welfare that add up to $101.28 Billion (not cash but food).

Then there is education assistance that is counted as welfare. For example, paying for the education of American natives living on indian reservations (those 19th century treaties again) cost the US $753 million and that is but one of sixteen active education programs that cost $65.7 Billion but is listed as welfare.

Infowars.com reported, “As many as 80% of Wal-Mart employees use food stamps.… ‘Wal-Mart’s poverty wages force employees to rely on $2.66 billion in government help every year, or about $420,000 per store. In state after state, Wal-Mart employees are the top recipients of Medicaid.

“Wal-Mart workers’ reliance on public assistance due to substandard wages and benefits has become a form of indirect public subsidy to the company. In effect, Wal-Mart is shifting part of its labor costs onto the (tax-paying) public.'”

The Walton family is one of the richest families in the world and their wealth was inherited from Bud and Sam Walton, founders of the world’s largest retailer, Wal-Mart. The Walton family controls 48% of the company and are worth a combined total of $102.7 Billion (as of 2012).

And Wal-Mart is not alone. Time.com reported, “There’s a disturbing irony within the food industry: Many of its employees rely on food stamps … and 86% of workers are earning either subminimum, poverty or low wages.”

On October 15, 2012, Statistic Brain.com reported that the total number of Americans on Welfare was 4.3 million and 38.8% (1.67 million) were white; 39.8% black (1.7 million); 15.7% Hispanic (675 thousand); 2.4% Asian (103.2 thousand) and 3.3% other.

However, there are 40.34 million blacks and 47.4 million Hispanics in the US.

In addition, “A household must earn $37,105 a year to afford the national average two-bedroom fair-market rent of $928 a month. A full-time worker would have to make $17.84 an hour to afford the average 2 bedroom if no more than the recommended guideline of 30 percent of income is spent on housing.”

“A household must earn over $66,000 to afford a 2-bedroom in San Francisco or Honolulu, but only $24,800 for a 2br apt in Fargo, North Dakota.” Source: The World Time News Report

However, Wal-Mart’s average sale Associate makes $8.81 per hour, according to IBIS World, an independent market research group. This translates to annual pay of $15,576, based upon Wal-Mart’s full-time status of 34 hours per week. This is significantly below the 2010 Federal Poverty Level of $22,050 for a family of four, and the median expected salary for a typical Combined Food Preparation and Service Worker in the United States is $23,153.

The US Census Reported that 41 million working men and 60 million women earn less than $25,000 annually, and/or the income of 30 million households is less than $25,000.

If you hear a blame-everything-on-welfare critic claim that nonworking deadbeats in addition to most blacks and Hispanics are living off welfare, now you know the facts and cannot be fooled.

His latest novel is Running with the Enemy. Blamed for a crime he did not commit while serving in Vietnam, his country considers him a traitor. Ethan Card is a loyal U.S. Marine desperate to prove his innocence or he will never go home again.

And the woman he loves and wants to save was trained to hate and kill Americans.

To follow this Blog via E-mail see upper left-hand column and click on “FOLLOW!”